3 Reasons Your Employees Make Bad Decisions at Open Enrollment

3 Reasons Your Employees Make Bad Decisions at Open Enrollment

Did you know that 80 percent of Americans typically enroll in a health plan that is not appropriate for their needs?1

That may come as a surprise, but when you consider some other statistics, it really shouldn't:

  • 83 percent of employees spend less than an hour researching their open enrollment options.2
  • 92 percent simply choose the same benefits they had the year before.2
  • Only 4 percent can correctly define the terms deductible, out-of-pocket maximum, copay and coinsurance.3

Open enrollment is likely one of the most complicated decisions your employees encounter in a given year. It can be intimidating, stressful and downright overwhelming. I've read that many employees say they'd rather go to the dentist or clean their toilet than select their benefits.

So it makes sense that there's a lot of defaulting when it comes to open enrollment. Employees just go with the plan that looks most like last year's – or even the plan their friends and coworkers chose – to get the process over with as soon as possible. Little time or thought is given to comparison.

The results can be costly, both for your employees and your company.

The Dangers of Benefits Mismatch

When employees don't properly evaluate their benefit options, it's likely they'll fall into the 80 percent that enroll in a poorly-fitting plan. Meaning they're either over- or under-insured.

Over-insured employees waste their own money and their employer's money — and not just on premiums. The simple fact that they have the coverage encourages these employees to use it, whether or not they truly need to use it. For instance, an employee might wake up with a runny nose and think, "Well I might as well go to the doctor and get a bunch of tests done." Moreover, the extra financial safety net provided by the oversized benefits can cause employees to be somewhat reckless with their health, so they end up needing more serious (and expensive) care down the road. Ultimately, over-insurance can inflate claims, driving up the cost of health care for everyone.

Under-insurance can wreak havoc on an organization, as well. While less coverage can mean lower costs for employers in the short term, the long-term effects are potentially catastrophic. Under-insured employees may forgo necessary treatment because they can't afford the expense, increasing the likelihood of prolonged or unplanned absences. Putting off care can also result in employees coming to work in poor condition, a situation that can actually cost a business 10 times more than absenteeism.4 Furthermore, undersized benefits can create serious financial stress in the workplace, negatively impacting morale and job performance – and your ability to retain top talent.

So what can be done?

3 Ways to Drive Informed Benefits Decisions

If you want employees to select benefits that better meet their individual needs, give them the tools to make it happen. Here are three ways you can use technology to personalize your open enrollment experience and break the trend of bad benefits decisions:

Provide plan recommendations

If you use sites like Amazon or Netflix, you've probably at some point seen a "Recommended for You"-type suggestion of a product or show you might be interested in based on past preferences. This can be a great way to discover something new, or something you need that you didn't know you needed. In benefits, it can be even more powerful.  

Amazon-ify your open enrollment with a plan shopping experience to guide employees through a traditionally tedious decision-making process.

Through a simple survey on the front end of enrollment that captures current health situation and risk tolerance, employees are presented with a "best-match" plan recommendation based on their responses. Employees can then review the details of the plan to make sure it's the right one for them. And it may not be, but this at least gives your employees a starting point to work from.

Integrate claims data

When my wife and I plan out our family budget every month, we rely heavily on our online bank statements. Having our spending history on hand is invaluable in helping us forecast where our money will go.

If your group is self-insured, you can provide a similar level of insight to your employees as they're deciding which health plan will make the most financial sense for them.

By incorporating employees' personal claims history into the plan shopping experience, you enable your workers to compare plans based on their utilization tendencies and the impact on their out-of-pocket costs. So if they're expecting the same, more or less health care services during the next plan year, they have a benchmark to help them more easily identify the most cost-effective option.

Learn how American Eagle Outfitters empowered employees with claims data to improve plan fit! 

Go mobile

Personalizing your enrollment experience isn't just about the tools you provide. It's also about understanding how your employees operate when making buying decisions. And for a growing number of them, that's through their mobile devices. 

It's becoming more and more common for people to use their smartphones to shop for cars, do their taxes and even apply for mortgages. If your employees can use their mobile devices for those traditionally complex processes, wouldn't it only make sense for them to be able to use them to enroll in their benefits?

Picture this. It's open enrollment. Your employees are living their normal, on-the-go lives. But if they're ready to enroll in their benefits, they don't have to wait until they're back in front of a desktop computer. They can just open up an app or their device's mobile browser and begin a mobile-optimized enrollment experience, complete with plan recommendations and integrated claims data. A few swipes and clicks later, and they're done.

See these tools in action!

Click here for a demo of technology designed to personalize the enrollment experience and drive cost-effective benefits decisions.

 

Sources:

1. Johnson EJ, Hassin R, Baker T, Bajger AT, Treuer G: Can Consumers Make Affordable Care Affordable? The Value of Choice Architecture.

2. 2017 Aflac WorkForces Report

3. PolicyGenius: Health Insurance Literacy Survey

4. EHS Today Presenteeism Costs Businesses 10 Times More than Absenteeism